NIDHI COMPANY REGISTRATION ONLINE | REQUIREMENTS & PROCEDURE

INTRODUCTION:  

A Nidhi Company is a kind of financial institution, which is similar to the existing NBFCs (Non-Banking Financial Company). Their origin can be traced back to the early 20th century. Even the name ‘Nidhi’ itself speaks about it, as its meaning is ‘TREASURE’. Nidhi organization is made chiefly for developing the propensity for frugality and investment funds among its individual members. In India, they were mainly created to develop a habit of small savings in the members of middle-class individuals. The main business activity of a Nidhi Company is borrowing and lending money among its members. There are various names by which a Nidhi Company is known, such as Mutual Benefit Funds, Mutual Benefit Company, Permanent Fund, etc. These companies are much more active and have a popular base in southern parts of India, especially Tamil Nadu. The underlying concept on which a Nidhi Company works is the principle of mutuality, which basically means that no one can make profits out of himself or no one can get into the trade by himself alone. 

The Nidhi Companies are governed by Section 406of the Companies Act, 2013. The Act has laid down some rules to be followed by a Nidhi Company, which are called Nidhi Rules, 2014. It comes under the Ministry of Corporate Affairs which is empowered to issues guidelines and directions on acceptance deposit activities. The main difference between a Nidhi Company and an NBFC is that a Nidhi Company does not require registering itself with the Reserve Bank of India (“RBI”) as RBI itself has exempted them. An important direction to be followed here is that each Nidhi Organisation should guarantee inside a time of one year from the initiation that it has at least 200 individuals.

FEATURES OF A NIDHI COMPANY:

1. A Nidhi company features the name ‘Nidhi’ in its Company’s name as mandated by RBI so that the general public can differentiate between a Nidhi Company and other Financial companies. 

2. It has a minimum paid-up capital of INR 5,00,000/- and a Net Owned Fund of INR 10,00,000/-(Within one year of incorporation).

3. It promotes small savings for middle and lower-middle-class individuals whoever only among its members. 

4. It has an easy registration process. 

5. Easy grant of loans against the collateral. 

6. It has a rigid membership structure, which helps in availing secured means of investment. 

7. Easy documentation avoids complex procedures of getting loans. 

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

ADVANTAGES OF A NIDHI COMPANY OVER OTHER NBFCs: 

1. Easy formation: It requires only 7 members to start the Company and even out of which 3 members would be the Directors of the Company. 

2. Minimum capital: It takes only INR 5,00,000/- to start a Nidhi Company. 

3. Limited RBI Regulations: It does not required RBI’s approval or permission for its registration and follows Nidhi Rules, 2014 laid by the Central government. 

4. No outside intervention: They provide benefits to their members only. Outsiders are not allowed to have benefits or intervene in the matters of a Nidhi Company.

5. Minimum risk of loan defaulters: As a Nidhi, Company works only for their members and grant loans to their members only, so there is less risk of having non-payment of loans.

6. Perpetual succession: Even after the demise or retirement of any members from the Nidhi Company, its activities are not hindered, and keep on working independently of any such change in the Company. Nidhi Companies follow an act of never-ending progression, which permits the Nidhi Company to proceed with its activities till the time it gets legitimately disintegrated.

DISADVANTAGES OF A NIDHI COMPANY OVER OTHER NBFCs:

1. Limited funds availability: The Nidhi Companies accept the deposits of their members only. Therefore, there is a limited scope of raising funds. 

2. RBI Vigilance: Although they are not regulated by the guidelines/rules/provisions of the RBI, but their Deposit-Acceptance operations are governed by the RBI. 

3. 200 members: According to Section 406 of the Companies Act 2013 read with Nidhi Rules, 2014, A Nidhi Company needs to guarantee that before the first year’s over post-incorporation, it holds at least 200 individuals, and the Net Owned asset ought to be Rs 10 lakh or in excess of 10 lakh rupees. Satisfying these necessities post one year of joining once in a while may get interesting.

4. Restricted advertising: In contrast to other monetary establishments, Nidhi Companies are limited from publicizing their saving plans. Nidhi Companies are permitted to publicize among its individuals as it were.

5. Limit on deposit schemes: A Nidhi Company isn’t permitted to carry on its deposit plots anything more than a time of 5 years.

6. Preference share: A Nidhi company has a limitation on issuing preference shares, which they cannot issue them

7. Branches: Nidhi Company needs to open 3 branches in the wake of finishing its 3 years in the same District or place. Furthermore, in the event that a Nidhi Company needs to open its branches in different areas, it needs to get RD endorsement, and critically it can’t open any branches in different states

8. Ban on businesses like Chit Fund, Leasing Finance, insurance, etc.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

REQUIREMENTS OF A NIDHI COMPANY AFTER ITS INCORPORATION TO BE FULFILLED WITHIN ONE YEAR PERIOD:

1. It must have listed in itself at least 200 members, which at any point of the year must not decrease under 200.
2. It must have its Net Owned Funds of INR 10,00,000/- or more. 
3. It should likewise guarantee that the proportion of net claimed assets to store isn’t more than 1:20.
4. It should have unhampered term stores of at least 10% of the remarkable stores.
5. It needs to file NDH-1 duly certified by a Practicing CA/CS/CWA along with the prescribed fees after it has fulfilled the above-mentioned requirements. 

THE NIDHI COMPANY REGISTRATION PROCESS IS AS FOLLOWS: 

The Ministry of Corporate Affairs vides its notice dated 18th February, 2020, effective from 23rd February 2020, has additionally altered the companies(incorporation) rules, 2014 in this way subbing the old structure INC-32 (SPICe) with web administration SPICe+ alongside certain different alterations.

A Nidhi organization can be begun with an underlying capital of INR 5 Lakh and needs at any rate seven individuals, to begin with (at least 7 individuals). Nidhi organization enlistment additionally requires three chiefs at first. Each advertiser or chief requirements a duplicate of PAN card, ID evidence and address confirmation to apply for a Nidhi organization in India.

Typically Nidhi Company Registration Process requires as long as 45 days; registration of a Nidhi Company comprises the accompanying advances:

1. A Minimum No. of 7 Members and 3 Directors is required to commence the registration of Nidhi company.

2. Then Apply for DIN as well as Digital Signature Certificate.

3. After getting the DIN as well as DSC, submit an application in INC-1 to MCA for reservation of the name of Nidhi Company.

4. Once the name is approved by the Ministry, You have to prepare Memorandum of Association (MOA) and Articles of Association (AOA) according to Nidhi objects and all other required documents carefully such as, Form INC-32 (using DSC of the Directors)along with (eMoA) in Form INC-33 and (eAoA) in Form INC-34.

Specific forms to be filled:

INC 9 – Signed by all the subscribers to MoA be filed.

DIR 2 – To be filed by all the directors of the Company, declaration as per Rule 5 & 6 of Nidhi rules 2014 – also to be signed by all the subscribers

5. Requirement of passports in case of Foreign Nationals.

6. Apply for the Incorporation of the Company.

7. Get Incorporation Certificate.

8. Apply for PAN and TAN. 

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

DOCUMENTS REQUIRED FOR A NIDHI COMPANY:

1. Identity proofs of directors and Proof of the registered place of premises ie., Ownership documents or rent or lease agreement in case the premises is taken on rent;
2. No Objection Certificate (“NOC”) (signed by the owner/ landlord)
3. Residence/Address proof of members
4. Photos of the members
5. PAN card of member individuals
6. Digital Signature
7. Director Identification number
8. Memorandum of Association of the Company
9. Articles of Association of the Company

MANDATORY COMPLIANCES FOR A NIDHI COMPANY: 

1. FORM NDH 1

In this structure, A Nidhi Company needs to present the rundown of Nidhi Company individuals inside the time furthest reaches of 90 days at the conclusion of the monetary year.

2. FORM NDH 2

In this structure, A Nidhi Company can make a solicitation to MCA for augmentation, on the off chance that it has not been able to add 200 individuals in its first monetary year.

3. FORM NDH 3

Other than the structures referenced over, A Nidhi Company is additionally expected to record a half-yearly return in NDH 3 Form.

4. ANNUAL RETURNS WITH RoC

It’s something mandatory that a Nidhi Company should document a yearly get back with the Ministry of Corporate Affairs through Form MGT-7.

5. PROFIT, LOSS, AND BALANCE SHEET

In Form AOC-4, A Nidhi Company needs to submit fiscal summaries and other related archives.

6. INCOME TAX RETURNS 

Nidhi Company should record yearly returns in the accompanying monetary year by September 30, similar to the remainder of the organizations.

CONCLUSION

From the owner’s perspective: It is the easiest to start a Nidhi Company when compared to the NBFCs, as it does not comes under the supervision of RBI and has a less paid-up capital to start the Company.
From the member’s perspective: If an individual becomes a member of a Nidhi Company, he is eligible to make deposits and avail loans easily without any complex procedures. It also cultivates the habit of small savings among its members. 

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

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